A game in which people pay a small amount of money for a chance to win a large prize. Usually prizes are cash, but sometimes they are goods or services. A lottery is a type of gambling, but unlike most types of gambling it does not involve skill or knowledge. Many state governments organize lotteries to raise money for public purposes.
The word lottery is derived from the Dutch noun lot, which means fate or luck. It can also refer to any scheme for distributing prizes on the basis of chance. For example, a lottery might offer units in a subsidized housing block or kindergarten placements at a particular public school.
In the United States, a winner may choose to receive his or her winnings in a lump sum or as an annuity. The choice affects the amount of income taxes that will be withheld from the prize. In addition, winners who elect to receive annuity payments will be required to pay state and local taxes on their prizes.
The lottery is often viewed as a way for poorer Americans to become rich. However, the percentage of the jackpot that actually makes it to the player is tiny. It is even smaller when the cost of purchasing tickets and other fees are taken into account. It has been estimated that only about 40 percent of a lottery ticket goes to the winner. Moreover, it is a drop in the bucket for actual state governments, making up only 1 to 2 percent of state revenue.